CANDIDATE HANDBOOK 2021 Board of Directors Election - Farmlands

CANDIDATE
            HANDBOOK
            2021 Board of Directors Election
FAR_10249

Farmlands Co-operative Society Limited   2021 Board of Directors Election

CONTENTS
Introduction............................................................................................................................... 4

Nominations.............................................................................................................................. 5

Conflict Disclosure Before the Election Process....................................................................... 6

Elections.................................................................................................................................... 7

Election Timetable..................................................................................................................... 9

Candidate Profiles................................................................................................................... 10

Candidate Evaluations............................................................................................................ 11

Directors’ Requirements.......................................................................................................... 13

Directors’ Accountabilities...................................................................................................... 14

Remuneration.......................................................................................................................... 17

Board Meetings....................................................................................................................... 18

Farmlands Co-operative Society Limited                                3                                      2021 Board of Directors Election

INTRODUCTION
This booklet outlines information which may be of interest to you as a candidate in the 2021
Farmlands election of Directors.

It has been prepared as a guide to assist possible candidates with general information on the
election. It should be used as a guide only, and should not be relied upon as a complete or legally
binding document.

Candidates or other persons requiring more detailed information should contact the Returning
Officer, or refer to the Rules of Farmlands that are available from the Returning Officer.

Farmlands has again appointed electionz.com Ltd as the elections contractor for the 2021 Directors
Election. Anthony Morton from electionz.com has been appointed Returning Officer for this
election and Warwick Lampp from electionz.com has been appointed Deputy Returning Officer.

This means that electionz.com will be handling most matters pertaining to the election.
electionz.com is based in Christchurch and has managed the voting processes for Farmlands
Director Elections since 2014.

The role of the Returning Officer is to conduct the election in accordance with the Rules, as well as
in accordance with accepted best practice for election management.

Subject to those regulations, the Returning Officer has complete and final control over how the
election is carried out. The Returning Officer is engaged by Farmlands and is responsible to the
Board, but does not take direction from the Board.

The Returning Officer is responsible for all staff, systems, resources, policies, procedures and
actions to ensure the democratic process is carried out with utmost integrity, security and fairness
for all parties.

The Returning Officer’s decisions on all matters about the election are final.

For further information about Farmlands, please see www.farmlands.co.nz.

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NOMINATIONS
Elections are being held for one Director in the South Island and one Director in the
North Island in 2021.
In the North Island, Gray Baldwin retires by rotation and is seeking re-election.
In the South Island, Dawn Sangster retires by rotation and is seeking re-election.

A person nominated to stand as a candidate:
  • must be a shareholder of Farmlands; and
  • must have been a transacting member of Farmlands for at least 3 years prior to the date of the
    nomination.

Existing Directors who are required to retire by rotation and who intend to re-stand must complete
and return the standard nomination form by 5pm on Thursday 26 August 2021, but they do not have
to complete Part B of that form. All other nomination requirements apply.

Nomination forms
  • The appropriate form is available from the Returning Officer
    (see contact details below), or the Society’s website: www.farmlands.co.nz.
  • The nomination form must be signed by two shareholders.
  • The nomination form must contain written confirmation by the nominee of his or her willingness
    to be elected.
  • Completed nomination forms must be received by the Returning Officer no later than 5.00pm
    on 26 August 2021 (see details below). Return options are included on the nomination form and
    include email, courier or hand delivery and post.
  • Once lodged, the nomination form is checked to ensure the nominator and seconder are valid
    shareholders and resident in the appropriate island.
  • The candidate profile statement and/or candidate photo (see Candidate Profiles for further
    details) must be submitted at the same time as the nomination paper.
  • The lodgement of nomination forms should not be left to the last minute. Should a nomination
    form be lodged late on the day nominations close, and be incorrectly completed or refer to an
    ineligible nominator or seconder, there may be insufficient time to correct the situation and the
    nomination could be invalidated.

Returning Officer Contact Details
Phone: 0800 666 047 or 021 326 021
Email: amorton@electionz.com
Post: PO Box 3138, Christchurch 8140
Web: www.electionz.com
For further information or additional copies of this booklet, please contact the Returning Officer
or the Deputy Returning Officer – at electionz.com on 0800 666 047.

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CONFLICT DISCLOSURE BEFORE
THE ELECTION PROCESS
When a transacting shareholder of Farmlands is considering whether to accept the nomination
to stand as a candidate in the Director Elections they must consider if, due to their particular
circumstances, accepting a Farmlands Directorship would place them in a position of conflict1 and
if so the significance of that conflict on their ability to fulfil their obligations should they be elected to
the Farmlands Board.
If a significant conflict is identified, the candidate should carefully consider whether to proceed with
their nomination and/or at any time prior to the preparation of the voting pack whether to withdraw
from the election process.
All candidates will be required to declare any conflicts to electors so that shareholders voting in the
Director Elections have appropriate information concerning the relevance and significance of any
conflicts to assist them in making their decision whether or not to give their vote to the individual.
1
 For more information on conflicts of interest see the section on Directors’ Accountabilities later in this handbook.
In particular, please review the extract from the Board Code of Conduct concerning the fundamental obligation of
Directors to act with objectivity, independence and impartiality and avoid conflicts of interest so far as is possible.

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ELECTIONS
Voting
  • The Board is continuing with its digital strategy and where possible elections are shifting to
    online voting. All shareholders are encouraged to ensure we have their email address on record
    to make the voting process easier and more cost-effective moving forward.
  • To register your email address with Farmlands for electronic voting, email ask@farmlands.co.nz
    with your account number and ‘Director Elections’ in the subject line.
For those shareholders without email we will use the postal channel for the full voter pack as used in
previous years.
  • The voting system being used for this election is outlined in Schedule 6 of the Rules.
  • A shareholder is entitled to one vote per share held.

Campaigning
  • Election campaigning can commence once nominations have closed and an election is
    confirmed.
  • No election material can contain any untrue statement defamatory of any candidate and
    calculated to influence the vote of any elector.
  • No election material may contain an imitation voting paper which has the names of the
    candidates with any direction or indication as to the candidate a person should vote for, or in
    any way contain such direction or indication likely to influence the voter.
  • Voting papers are not permitted to be collected from electors by candidates or persons on their
    behalf. Each shareholder voting is required to exercise their own electronic vote or to post or
    deliver his or her own voting paper to the Returning Officer.
  • Candidates:
     -    must act in good faith and in the best interests of Farmlands;
     -    must be respectful of other candidates and not make any statement relating to other
          candidates that are defamatory or that undermine the integrity of the election process;
     -    must not use any property or resources of Farmlands for campaigning purposes, including
          logos, brands, photos, images or other intellectual property of Farmlands; and
     -    may use letters, fliers, emails, radio, television, internet and printed media (dairy and farming
          magazines and newspapers) for campaigning purposes.

Electoral Roll
The share register for each electoral district is available for each candidate for electioneering
purposes. The register includes the name of the shareholder, their postal address, and their
shareholding. The register is available in two types of media:
  • hard copy; and
  • by email, either in PDF or Excel format, at your request.
The register is only to be used for electioneering purposes. There is no cost for this.
If you would like a copy please contact the Returning Officer who will provide you with an
acknowledgement form to complete, sign and send back to the Returning Officer, as per the
instructions on the form.

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Scrutineers
  • The processing of the voting papers is being carried out by electionz.com at its premises at 3/3
    Pukaki Road, Christchurch.
  • Voting papers will be returned in the reply-paid return envelope to the electionz.com postal
    address in Christchurch or by electronic vote. Electronic voting has the advantage of
    convenience, lower cost to your co-operative, and no postal delays that may cause your vote to
    be late and invalid.
  • Votes will be processed by electionz.com during the voting period. The Returning Officer or
    Deputy Returning Officer will be present at all times when any vote processing is undertaken.
  • With the use of progressive processing, it is expected that by the close of voting on Wednesday
    10 November 2021, most of the papers would have already been processed.
  • Any candidate that wishes to appoint a scrutineer to review the election process should contact
    the Returning Officer for further details.

Election Results
  • The election result will be calculated and checked and then advised to Farmlands as soon as
    possible after the close of voting on Wednesday 10 November 2021 at 5.00pm.
  • All candidates will be personally advised by phone or email.
  • The result will be advised to shareholders by public announcement as soon as practicable after
    candidates and the Board have been advised.

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ELECTION TIMETABLE
  2 August 2021                          Nominations open.

                                         Nominations close at 5.00 pm
   26 August 2021
                                         – candidates advised to Farmlands.

  30 August 2021                         Candidate evaluation process begins.

  13 – 14 September 2021                 Candidate assessment interviews.

  1 October 2021                         5pm deadline for candidate withdrawals.

  On or after 14 October 2021            Voting papers sent to shareholders.

  10 November 2021                       Voting closes at 5.00pm.

                                         First candidates and Board are advised of election
  After close of voting                  outcome and then a public announcement of the
                                         result will be made to shareholders.

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CANDIDATE PROFILES
Farmlands allows for candidate profiles to be provided by each candidate with the nomination paper.
In the event an election is required, these are collated by the returning officer and forwarded to
shareholders in a candidate profile document with the voting papers.

Candidate Profile Statements
  • Must not exceed 400 words and one side of one page of A4 paper.
  • Should include a telephone and/or email address for inclusion on the profile document for
    shareholder contact.
  • Must be confined to information concerning the candidate, and the candidate’s policies and
    intentions if elected to the Board.
  • Must be submitted with the candidate’s nomination paper.
  • May include a recent (i.e. less than one-year old) head and shoulders photograph of the
    candidate only.
    Photos should preferably be in an electronic format (scanned as an attachment by email), but
    hard copy photos will be accepted and scanned at 300 dpi. Photos will be printed in colour and
    may not necessarily be passport size. (N.B. photos will not be returned to candidates).
  • The candidate profile statement (preferably as a word document) and photo (preferably
    as a jpg) must accompany the nomination form and be emailed to
    nominations@electionz.com
  • The Society is legally not able to assist you in sending material to shareholders, other than the
    biography and independent evaluation.

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CANDIDATE EVALUATIONS
Independent Evaluation
If the number of nominations for either island exceed the number of vacancies available all
candidates will be independently evaluated.
  • Candidates will be required to agree in writing to participate in the evaluation process.
Farmlands wishes to ensure that it has the best quality Directors, so that the Board can produce the
best possible outcomes for shareholders. Farmlands also considers it important that shareholders
voting in the Director Elections have appropriate information to assist them in making their decision.
For these reasons, Farmlands has again appointed Propero Consulting to undertake an independent
assessment of all Director Election candidates.
  • Propero Consulting has provided these services to Farmlands for previous Director Elections
    and is a well-regarded organisation that specialises in governance services, including evaluation
    of boards and executive teams, and in this case, Director Election candidates.

Competencies
The broad competencies against which candidates will be evaluated on are:
Alignment to the co-operative
  • Commitment to the co-operative model
  • Primary sector knowledge
Environmental, social and governance
  • Governance potential
      Note – it is recognised that farmer candidates may not draw from a corporate governance background
  • Governance experience
  • Sustainability and climate change
  • Māori agribusiness
      Note – it is recognised that farmer candidates may not draw from extensive experience in this area
  • Communication and interpersonal style
Commercial business operations
  •   Strategic thinking and vision
  •   Business operations and commercial acumen
  •   Computer systems and digital innovation in rural sectors
  •   Other strategic skills
      Note – it is recognised that farmer candidates may not draw from a corporate background

Candidate Pre-screening
Propero will conduct an initial CV and profile statement review, and candidates will complete
an HBRI assessment. Propero will consider the results against the Farmlands Board capability
requirements to make an initial determination of the strength of their candidacy. As a result,
Propero will recommend whether the candidate should continue in the process.

Those that elect to proceed will complete a self-assessment survey and attend an interview
with the assessment panel. Propero will then finalise assessment ratings and provide an
evaluation summary that will be sent to shareholders as part of the voting pack.

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Candidates will:
  • be asked to complete assessments, including psychometrics, to evaluate strategic thinking,
    critical thinking, personality and disclose any conflicts of interest. Note: full personal feedback
    will be given and is confidential to the candidate and the consultant; and
  • be interviewed by the candidate assessment panel.

References
  • Propero conducts referee discussions for all candidates.
  • This involves reaching out to referees by phone, to learn more about the candidate’s
    employment history, commercial background, governance potential, strengths and potential
    development opportunities.
  • Referees generally consist of a Chair of a Board of which they are a Director, a fellow Director
    and/or a CEO of a company of which they are a Director. It is preferred that all references come
    from different companies and are current or recent governance roles.

Evaluation
  • From the evaluation, Propero will complete candidate assessment ratings and candidate
    evaluations which will be sent to all shareholders as part of the voting pack and will include a
    declaration of any conflicts by each candidate.

Candidates will be able to withdraw from the election process, if they wish, at any time prior
to the preparation of the voting pack. If candidates do want to withdraw they should confirm
that with the Returning Officer as soon as possible. The deadline for withdrawals for this
election will be 5pm Friday 1 October 2021. The identity of any candidate who withdraws will
be confidential and not known to shareholders.

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DIRECTORS’ REQUIREMENTS
Director Requirements (Extracts from the Rules of the Society)
69     Qualification as a Director
     69.1     No person (except the Directors appointed under clause 68) shall be qualified to be a
              Director unless that person is a Transacting Shareholder and has been a Transacting
              Shareholder of the Society during the three years preceding the date of nomination or
              re-election (as the case may be).
     69.2     For the purposes of this clause, a person who is a director of a company, society or other
              body corporate that holds Shares or who is the trustee of a trust that holds Shares, where
              that company, society or other body corporate is a Transacting Shareholder, shall, at the
              discretion of the Board, be deemed to be a Transacting Shareholder for the purposes of
              clause 69.1.
73     Rotation of Directors
     73.1     Shareholder Directors shall hold office for three years and shall retire, and be subject to
              re-election, at the annual general meeting nearest to the expiry of three years from the
              date of election.
     73.2     Shareholder Directors appointed by the Board under clauses 67 and Independent
              Directors shall hold office for three years or such lesser term as the Board determines.
              Such Directors may be re-appointed at the expiry of that term if they are eligible for
              appointment. A retiring Director continues to hold office until the conclusion of any
              meeting at which they are required to retire unless they are re-appointed in accordance
              with these Rules.
     73.3     A retiring Director who is not disqualified under clause 71 is eligible for re-election.

Interested Directors
81     Directors must disclose their interests
       As soon as a Director becomes aware of the fact that they are interested in a transaction or
       proposed transaction with the Society, that Director must disclose that interest.
82     Failure to disclose does not affect validity of transaction
       Any failure by a Director to comply with clause 81 does not affect the validity of a transaction
       entered into by the Society or the Director. However, the transaction may be avoided under
       clause 83.
83     Society may avoid transaction if Director interested
       Where the Society enters into a transaction in which a Director is interested, the Society may
       avoid that transaction at any time before the expiration of 3 months after the transaction is
       disclosed to Shareholders (whether by means of the Society’s annual report or otherwise).
       However a transaction cannot be avoided if the Society receives fair value under it. Sections
       139 to 144 of the Companies Act 1993 shall apply (with such modifications as may be
       necessary) as if the Society was a company incorporated under that Act.

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DIRECTORS’ ACCOUNTABILITIES
The Board of Directors legally represents the interests of Farmlands’ farmer shareholders and the
communities and organisations with whom farmers interact.
As farmer representatives, the Board members have the responsibility of establishing, guiding and
assessing the overall direction of Farmlands.
(Extract from Board Code of Conduct)
1. Role of the board
    1.1       The board of directors is appointed by shareholders to govern and direct Farmlands’
              interests. The board is the overall and final body of responsibility for all decision-making
              within the organisation.
    1.2       Farmlands’ principal objective is to operate as a successful co-operative business.
    1.3       The board is responsible to protect and enhance the value of Farmlands and to properly
              direct and control the organisation’s activities.
    1.4       The board shall ensure that Farmlands’ goals are clearly established and that strategies
              are in place to achieve them.
    1.5       The board will satisfy itself that the organisation is achieving its goals.
    1.6       The board recognises that the quality with which it performs its functions is an integral
              part of the performance of the organisation and that there is a strong link between
              governance and performance.
    1.7       The board acknowledges that its most important role is to provide high level counsel
              to the Chief Executive Officer (CEO), to constantly monitor the performance of the
              CEO against the board’s requirements and expectations and to take timely action
              if the principal objective of the organisation is not being achieved or a correction to
              management is required.
    1.8       This responsibility includes such areas of stewardship as:
               -    commercial performance
               -    business plans and budgets
               -    corporate policies
               -    financial and distribution policies
               -    management oversight and development
               -    delegations of authority
               -    identification and management of business risks
               -    identification and management of business opportunities
               -    internal control systems
               -    integrity of management information systems
               -    compliance with relevant law
               -    relationships with stakeholders and other external parties
               -    reports to shareholders

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1.9       In the normal course of events, day to day management of Farmlands will be in the hands
              of management.
    1.10      The board may delegate any of its powers where consistent with the law and Farmlands’
              rules. However, whenever the board delegates a power the board remains responsible for
              the exercise of the power by the delegate, unless the board:
               -    believes on reasonable grounds that the delegate will exercise the power in
                    conformity with the duties imposed on directors by law and Farmlands’ rules; and
               -    monitors, by means of reasonable methods properly used, the exercise of the power
                    by the delegate.
    1.11      To enhance efficiency, the board has delegated some of its powers to board committees
              and other powers to the CEO and others (including subsidiary organisation boards). The
              terms of delegation to the CEO are clearly documented. The CEO has formally delegated
              some of his authorities to his managers and has established a formal process for those
              managers to sub-delegate certain of their authorities.
2. Fundamental obligations
   Directors must:
    2.1       Act honestly and in good faith in what they believe to be the best interests of Farmlands.
    2.2       Exercise powers only for a proper purpose.
    2.3       Comply with the law and Farmlands’ rules.
    2.4       Ensure that all decisions relating to the operation of Farmlands are made by or pursuant
              to the authority of the board.
    2.5       Not agree to the organisation engaging in reckless trading.
    2.6       Not agree to the organisation agreeing to incur an obligation that it cannot perform.
    2.7       Exercise the care, diligence and skill of a reasonable director.
    2.8       Comply with rules and policies concerning transactions in which directors have a
              ‘self-interest’.
    2.9       Comply with rules relating to the use and disclosure of organisation information.
    2.10      Not agree to the business of Farmlands being carried on in a manner likely to create a
              substantial risk of serious loss to Farmlands’ creditors; or cause or allow the business of
              Farmlands to be carried on in a manner likely to create a substantial risk of serious loss to
              Farmlands’ creditors.
    2.11      Not agree to Farmlands incurring an obligation unless they believe at that time, on
              reasonable grounds, that the organisation will be able to perform the obligation when it is
              required to do so.
    2.12      When exercising powers or performing duties as directors, exercise the care, diligence
              and skill that reasonable directors would exercise in the same circumstances taking into
              account but without limitation:
               -    the nature of Farmlands;

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-    the nature of the decision; and
               -    the position of the directors and the nature of the responsibilities undertaken
                    by them.
    2.13      Ensure that all shareholders are treated fairly.
    2.14      Carry out their duties in a lawful manner and use all reasonable endeavours to ensure that
              the organisation conducts its business in accordance with the law and Farmlands’ rules
              and with a high standard of commercial morality.
    2.15      Act with objectivity, independence and impartiality and avoid conflicts of interest so far as
              is possible. Where a conflict or potential conflict arises, as a minimum each director must
              adhere scrupulously to the procedures provided by law and by the rules and policies
              of the organisation for dealing with conflicts and with the position of directors having
              an interest in a particular contract or issue. A director who has a continuing conflict of
              interest of a material nature should consider resignation as a director of Farmlands and
              should also consider the effects of resignation on remaining members of the board and
              on shareholders.
    2.16      Be diligent, read board agenda papers, attend board meetings and devote sufficient
              time to be familiar with the nature of the organisation’s business and the environments,
              including political, legal and social, in which it operates. Each director should be aware of
              all statutory and regulatory requirements affecting Farmlands.
    2.17      Observe the confidentiality of non-public information acquired as directors and not
              disclose it to any other person without the authority of the board.
    2.18      Discharge their roles with competence, care and diligence.
    2.19      Continuously improve their professional knowledge and skills. Where appropriate,
              Farmlands should pay for or contribute to the cost of a director’s continuing professional
              development as a director. The board should also ensure that senior managers who are
              required to sit on associated organisation boards are given appropriate training in order to
              be able to properly discharge their own duties.
    2.20      Act in accordance with their fiduciary duties. Each director should comply with the spirit
              as well as the letter of the law, mindful that in addition to purely legal requirements the
              proper discharge of the duties of a director requires high ethical and moral standards of
              behaviour.
    2.21      Not bind themselves to a pre-determined stance or course of action in the public arena
              which may then significantly impact on decisions taken at the board table.
    2.22      Not publicly criticise Farmlands or its subsidiaries, or dissent from a collective board
              decision in a manner likely to damage confidence in the organisation or its subsidiaries.
    2.23      Familiarise themselves with the legal risks, both to the organisation and to the individual
              directors, and take all reasonable steps to minimise and/or manage such risks.

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REMUNERATION
(Extract from the Rules of the Society)
85 Board’s power to authorise remuneration and other benefits is limited
    85.1      The Board may authorise the:
              85.1.1 payment of remuneration or the provision of other benefits by the Society to a
                     Director for services as a Director or in any other capacity;
              85.1.2 payment by the Society to a Director of compensation for loss of office;
              85.1.3 entering into of a contract to do any of the things set out in this clause;
                         only if the relevant action has been approved by an Ordinary Resolution and the
                         Board is satisfied that to do so is fair to the Society. Each resolution must express
                         Directors’ remuneration as an annual monetary sum payable either:
              85.1.4 among all Directors; or
              85.1.5 to any person holding office as a Director.
    85.2      If remuneration is expressed in accordance with clause 85.1.5 and there is an increase
              in the number of Directors holding office, the Board may, without the authorisation of an
              Ordinary Resolution, increase the total remuneration by the amount required to enable
              the Society to pay the additional Director or Directors remuneration not exceeding
              the average amount then being paid to each of the other Directors (other than the
              chairperson).
    85.3      No resolution which increases the amount fixed under a previous resolution is to be
              passed at a meeting of Shareholders of the Society unless notice of the amount of the
              proposed increase has been given in the notice of meeting.
    85.4      The Board may authorise the making of loans by the Society to a Director provided the
              loans are on the terms that are no more favourable than the terms of loans made by the
              Society to its members and the Board is satisfied that to do so is fair to the Society.
    85.5      The Board may not authorise the giving of guarantees by the Society for debts incurred
              by a Director.

Current level of Directors’ fees
Chair		           $136,000
Directors         $61,000

Directors’ expenses
Each Director is entitled to be paid for actual and reasonable travelling, accommodation and other
expenses incurred by the Director in connection with the Director’s attendance at meetings or
otherwise in connection with Farmlands’ business.

Indemnification by the Society
Farmlands is authorised by its Rules to indemnify directors and officers and take out insurance to
support that indemnification. The Board has and will continue to provide such an indemnity and
appropriate Directors and Officers insurance cover.

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BOARD MEETINGS
  • Farmlands Board meetings are generally held on the third Thursday and Friday every second
    month, usually in Christchurch and occasionally at other locations.
    Meetings on day 1 generally commence at 8.30am and finish by around 5.00pm and on
    day 2 commence at 8:30am and finish early afternoon.
  • Several meetings during the year include more detailed briefings on selected parts of the
    business and sub-committee meetings.
  • One week before each meeting, agenda papers and other materials are circulated to the
    Directors electronically.
  • Directors are also often requested to represent Farmlands at field days, farmer events,
    conferences, etc.

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